Below is a summary of its financial statements for the year ended 30 June 2021 and 2020 and a number of pre-calculated ratios.

Revenue for the year ended 30 June 2020 was below budgeted performance so the directors introduced three strategies during the year ended 30 June 2021, with the aim of improving performance.

1. Reducedsellingprices

2. Extendingcredittermstocustomers

3. Investment in additional equipment to increase manufacturing capacity

Statements of profit or loss for year ended 30 June

2021 2020

Revenue 1,391,820 1,159,850

Cost of sales (1,050,825) 753,450

Gross profit 340,995. 406,400

Operating expenses (161,450). (170,950)

Operating profit 179,545 235,450

Interest expense 10,000 14,000

Profit before tax 169,545 221,450

Tax 50,800. 55,300

Profit for the year 118,745 155,150

Statements of financial position as at 30 June

2021 2020

Property, plant and equipment. 459,590 341,400

Inventories 109,400 88,760

Receivables 419,455 206,550

Cash - 95,400

988,445 732,110

Share capital 100,000 100,000

Share premium 20,000 20,000

Retained earnings 376,165 287,420

Long term borrowings 61,600 83,100

Trade payables 295,480. 179,590

Overdraft 80,200 -

Tax payable 55,000 62,000

Total 988,445 732,110

Ratios

2021 2020

Gross profit margin 24.5%. 35.0%

Operating profit margin 12.9% 20.3%

Inventory days ? ?

Receivables settlement period ? ?

Payables settlement period ? ?

Current ratio 1.23:1 1.62:1

Gearing (measured as debt capital employed) ? ?

You have been employed as a consultant to advise the directors as to whether their strategies to improve performance have been successful.

a) Calculate the 4 missing ratios . You must show all workings.

b) Assess the performance and position of the company for the year ended 30 June 2021, comparing to the prior year, and advise the directors on the impact of their strategies and any concerns you may have. Your answer should include a short conclusion